The Esports Economy Will Generate At Least $465 Million in 2017

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Esports revenues totaled $194 million last year and will more than double to reach $465 million in 2017, according to Newzoo’s latest report The Global Growth of Esports: Trends, Revenues and Audience Towards 2017. The report chooses a conservative scenario but, using traditional sports as a reference, also shows how the esports Economy could easily generate more than $1 billion within just a few years. For this report, Newzoo teamed up with Repucom, the global leader in sports market research. In terms of audience, the report shows that the number of esports Enthusiasts will jump from 89 million last year to 145 million in 2017. Another 190 million will watch esports competitions occasionally, showing that competitive gaming has evolved to a spectator sport with a fan base comparable to that of Volleyball, American Football or Ice Hockey.

Heinrich Zetlmayer, Managing Director ESL Global: “Reading through the first, most extensive and comprehensive report that puts some realistic numbers on the esports industry was a pleasure. Especially the comparison to traditional sports is a valuable insight that will help everyone understand better what this business is about and the potential it has”.

Following a year of explosive growth in audience and money involved, 2015 will be pivotal in determining the future of esports. Newzoo’s Global Esports Report and the Esports Audience and Revenue Model behind it, aim to put esports into a broader perspective of trends, shed light on the factors and companies that will determine the speed of growth, and provide the concrete numbers that are currently lacking. Today, Newzoo and Repucom release an 11-page preview of the report.

Mike Wragg, Global Head of Research at Repucom: “Repucom has been studying sport and entertainment fans across the world for decades, and there’s never been a more exciting time for new formats which engage the next generation. This collaboration with Newzoo gives our clients a chance to see how far esports have travelled already, and the potential value we can expect in the near future.”

Since the outbreak of the esports phenomenon in the West, two questions always reoccur. Will esports evolve into a billion dollar industry? If so, when? And how does esports compare to traditional sports in terms of audience and revenues now and in the future?

Esports vs. Sports: How do they Compare?

The revenue mix of esports and sports is a key differentiator between the two markets. Esports, which is a product of a digital age, gets 34% of its revenues from online advertising and still relies on the investment of game publishers. This money is indirectly recouped by the publishers through spending on or in their games. Now, esports is quickly evolving into a business of its own. Many sponsors are jumping on board and consumers are contributing to championship prize pools and paying to attend online or real-life events. As the esports market matures, its revenue mix will closer resemble that of traditional sports which saw 57% of revenues come from sponsorships and selling media rights in 2014

Total sports and esports revenues are currently miles apart. At the same time, the $124 billion sports industry is comparable to the total global games market which will reach $107 billion on 2017. Comparing all sports with gaming and esports with individual sports makes a fair comparison.

In terms of fans, there are 2.2 billion people globally who consider themselves to be interested or very interested in sports and of these, 1.6 billion actively participate in at least one sport. This is comparable to the 1.7 billion people that play games. On a global scale, the number of esports enthusiasts compares well to mid-tier traditional sports. Swimming and ice hockey for example have 76 million and 94 million global fans respectively, similar to the 89 million esports enthusiasts. By 2017, the global number of esports fans will come close to that of American football.

Illustrative of the cross-over interest between sports and esports, the online sports business conference #SportsConf to be held this Thursday February 19th, will feature an esports panel discussion. Newzoo assisted in putting together the panel, featuring ESL, Twitch, The Score, Newzoo and League of Legends pro team Unicorns of Love. The panel discussion starts at 9:30AM PST / 5.30PM CET.

Can esports also grow to the level of individual sports in terms of revenues and surpass the billion dollar mark on its way? The report analyzes average revenue per fan or enthusiast to answer this question. On a global scale, there are 2.2 billion sports fans who each generate an average of $56 per year. The average revenue for individual sports is anywhere from $20 upwards. Esports enthusiasts on the other hand, currently generate an average of $2.2 per person per year, without game revenues taken into account. Our current esports revenue projections use a conservative $3.2 average revenue per enthusiast figure for 2017. With growth mainly driven by a larger audience, global esports revenues will still rise to $451 million in two years from now. This renders esports comparable to a top 10 sport or globally renowned leagues like the NFL or Champions League. If the average revenue per enthusiast grows faster and jumps to $7, esports will be a billion dollar business by 2017 with even more growth potential going forward. Drawing from the comparison with traditional sports, the report highlights which factors will determine the pace of growth of the esports Economy.

“Of all the reports Newzoo has published in its 8-year run, I’d have to say I’m most proud of our 68-page esports report”, said Newzoo CEO, Peter Warman. “It combines our ability to spot, size, model and analyze trends, producing industry first results for the maximum benefit of our clients.”

Other key take-aways:

Esports has been popular in Asia, Korea in particular, for over ten years. Thanks to the explosive uptake of esports in the West, growth is now accelerating both in terms of audience with a +20% annual growth rate (2012-2017 CAGR) and +29% for revenues.

The esports enthusiast is extremely valuable for big brands, digital media providers and hardware manufacturers alike. Participants and viewers are more likely than the total population to have a Netflix or Spotify subscription, to have a high income, a full-time job and a big budget for the latest hardware devices.

Esports betting is likely to already be close to a $100 million dollar industry. For Pinnacle, one of worlds’ largest sports bookmakers, it is the 7th biggest betting market in terms of volume, exceeding sports like golf and rugby. In 2014, we saw the first Esports Fantasy League with a prize pool of one million dollars.

“Esports offers iGaming operators a new and exciting market that falls outside the traditional sports genre,” said iGaming Capital CEO, Melissa Blau. “Only a few of the mainstream betting operators are fully taking advantage of esports, such as Pinnacle, Bet354 and recently Paddy Power. Video footage covering the events is now more wildly accessible with the Twitch generation, making esports a potential growth area large bookmakers.”

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